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Sunday, February 21, 1999 Published at 02:45 GMT

World: Asia-Pacific

Iran's fury over Caspian pipeline

The pipeline will avoid Russia and Iran

The Iranian Government has condemned Turkmenistan's decision to build a gas export pipeline under the Caspian Sea.

An Iranian Foreign Ministry spokesman called the move unacceptable, saying it was against the principles of countries bordering the Caspian.

Construction of the 2,000 km pipeline, by an American-led consortium, is due to begin later this year after a deal was signed by Turkmenistan on Friday.

It will run through Azerbaijan and Georgia on its way to the sea in Turkey, bypassing Iran.

Deal is "invalid"

Iranian Foreign Ministry spokesman Hamid-Reza Asefi said Iran was opposed to any project for carrying oil or gas under the Caspian and added that the decision violated both multilateral and bilateral agreements.

"Given the current legal status of the Caspian Sea... any unilateral measure by a state bordering it is considered invalid and unacceptable," he said.

The deal was signed by the Turkmen President, Saparmurad Niyazov with a consortium headed by PSG International, owned jointly by Bechtel Enterprises and General Electrics Finance Group, both of the United States.

BBC Central Asia Correspondent Louise Hidalgo says the trans-Caspian pipeline is the route the United States wanted.

Its vision is of a network of pipelines to transport the huge but landlocked energy reserves of the Caspian Sea to the Mediterranean, bypassing both the old master in the region, Russia, and Iran.

Rival route

The project is expected to take two years to complete, at a cost of $2.5bn.

Speaking at the signing ceremony, President Niyazov said his country would continue to pursue a rival route south through Iran.

But most observers are in little doubt that for the moment, this is a victory for Washington in the race to secure the lucrative transit fees for its allies and the increased political influence that having the main export routes from the Caspian will bring.

Russian-Iran opposition

For Turkmenistan too, the deal brings one step closer its dream of a major pipeline to export its vast gas reserves, estimated to be the fourth largest in the world.

The country is desperately poor and will be hoping that Washington's backing will ease the problems of financing the huge project.

But many problems still remain. Some have questioned the commercial viability of a trans-Caspian pipeline while both Russia and Iran have made clear their opposition to it.

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